The Securities and Exchange Commission announced the filing of a Complaint in the United States District Court for the Eastern District of New York on August 18, 1999, seeking a permanent injunction, disgorgement, civil penalties and other relief against Vincent Napolitano, Irving J. Stitsky, Jordan I. Shamah, Robert B. Kessler, StockPlayer.com, Inc. and fifteen corporate relief defendants, many of them offshore companies. The Complaint alleges these individuals engaged in a complex "pump and dump" scheme in which they: (1) obtained large blocks of stock in certain microcap issuers; (2) disseminated buy recommendations through StockPlayer, an Internet newsletter published by StockPlayer.com and controlled by Napolitano; (3) manipulated the prices of those securities through the use of bid and ask quotations and by bidding for and purchasing those securities while engaged in distributions of the blocks of stock held by the defendants; and (4) sold out their shareholdings at profits of millions of dollars. The Complaint also alleges Napolitano and StockPlayer.com disclosed only a portion of the compensation they received from issuers for publishing buy recommendations for their securities and alleges Napolitano engaged in "scalping" by selling stock at the same time StockPlayer was recommending to subscribers that they buy those securities.

According to the Complaint, from at least March 1998 through June 1999 Stitsky, Shamah and Kessler engaged in this course of conduct with respect to transactions in the securities of at least four issuers: Detour Magazine, Inc.; Wineco Productions, Inc.; TriCom Technology Group, Inc.; and Fidelity Capital Group Holdings, Inc. It is also alleged that Napolitano participated in the fraudulent course of conduct with respect to Detour, Wineco and Fidelity. It is alleged that Stitsky, Shamah and Napolitano obtained up to 95% of the public float in these securities, published buy recommendations on the StockPlayer web site and distributed detailed profiles of the issuers via e-mail to StockPlayer subscribers. It is further alleged that Kessler, Stitsky, Shamah and Napolitano manipulated the prices of the securities and kept those prices at the manipulated levels while the stock controlled by Stitsky, Shamah and Napolitano was sold into the demand created by the StockPlayer recommendations.

The Complaint alleges that beginning in May 1997, Napolitano published buy recommendations in StockPlayer regarding the stock of at least seven issuers: ARXA International Energy, Inc.; Iron Holdings Corp.; Collision King, Inc.; Tilden Associates, Inc.; Detour Magazine, Inc.; Wineco Productions, Inc. and Fidelity Capital Group Holdings, Inc. It is alleged that in each instance, the issuer paid Napolitano large amounts of the company's stock as compensation for his promotional services. The Complaint alleges that Napolitano only disclosed a small portion of this compensation and that most of the stock was placed into the accounts of offshore corporations controlled by Napolitano. It is alleged that the stock paid by issuers had an aggregate value of at least $10,000,000 at the time it was paid to Napolitano. It is further alleged that Napolitano's scalping activity in these securities yielded profits to him of at least $3,000,000. Finally, it is alleged that with respect to at least two of the recommendations published in StockPlayer, Napolitano knowingly or recklessly disseminated false information concerning the operations of those issuers.

All four individual defendants are former employees of Stratton Oakmont, Inc., a defunct Lake Success, New York broker-dealer. On August 18, 1998, while they were allegedly engaged in the conduct which is the subject of this Complaint, Stitsky and Shamah were barred by the Commission from association with any regulated entity and ordered to cease and desist from violations of the antifraud provisions of the federal securities laws.

It is alleged that by engaging in such conduct Napolitano violated Sections 17(a) and 17(b) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act and Rule 10b-5 thereunder and Rule 102 of Regulation M. It is alleged that Stitsky and Shamah violated Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder and Rule 102 of Regulation M. Finally it is alleged that Kessler violated Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder and Rule 101 of Regulation M.